Okay, this is going to sound a little like a conspiracy theory but hey, just because your paranoid etc.
I have just watched a series on the UK supermarkets that looked at the power that they have to influence everything from the price they pay to suppliers to the influence that they have in obtaining planning permission for new stores. To say that they are immensely powerful is no exaggeration as even the UK government is investigating them, the third time in the last six years.
According to this show they now control somewhere in the region of 70% of the UK food retail market is controlled by the largest of them. Tesco's, Britain's largest supermarket chain accounts for one in eight pounds spent in the food retail industry and the market is worth 120 billion pounds per year. So what's the problem. I mean they have got to where they are by applying good business tactics, cutting costs and maximizing profits (one store made 4 million pound Farin a day leading up to Christmas), good, wholesome market enterprise.
I mean, you get a wide range of goods, generally cheaper and quicker and all from a single place so that is good right?
Many people would disagree. The financial clout that these store wield means that getting planning permission is relatively easy, despite the impact that this may have on the locals shops or community. In many cases the locals want the store as it will provide them with cheap, convenient food.(I will be talking about this at a later date) It is only after the store is built that the truth can sometimes reveal itself. However, the price that they offer and the tactics that they use can, in some cases be seen as tantamount to bullying tactics.
Either way it is a strong county council that resists the approach of a large supermarket chain.
So the store gets built, sometimes closing down and demolishing local amenities or housing (although they pay the councils for these activities). The store provides a wide range of cheap food and slowly, especially if the store is out of the town center, the locals traders find themselves squeezed out of business. Why slog around a half a dozen shops to pay more for food it you can get it cheaper in one place right?
Of course after a while the supermarkets who are analyzing the purchases from the store start to cut back on a number of ranges that aren't as popular as others. It makes no sense to provide a large range of foods and other items if a smaller range will do and reduce the overheads at the same time. Still these items won't be missed will they? The computer says 'no'. And in any case the store hires staff which helps to balance to impact it is having on the locals stores right? Well, almost. It is unlikely, in the longer term that the store will hire all those they it has affected either directly or indirectly. I mean they are overheads, usually the largest so it makes no sense to have too many staff or to pay them more that they are worth. All good business sense.
Also good business sense is to expand the range of goods and services that the store offers. Hence locals store, initially unaffected by the store arrival find that they too are being affected. More closures on the high street, more charity shops spring up and the place becomes less attractive to new businesses. Eventually its all banks, pubs, shoe shops and Charity shops with the odd bookshop or restaurant. No baker, green grocer, haberdashers, butcher etc etc.
So a few shops close. You can still buy the stuff you want in the supermarket, of course except that joint of meat that you used to get at the local butchers and those other things that used to be on the supermarket shelves but aren't there now...Never mind its cheaper anyway...not as cheap as when it first opened of course. I mean things get more expensive don't they?
They people that actually supply the superstores complain they they can barely make a living due to the pressure they are up under to supply cheaper and cheaper produce. Farmers, dairy farmer and other producers are forced to accept very low payment or they are forced to close down. Eventually the superstore may end up dealing with only a few, very large producers who, through economies of scale can provide the goods at the price that the superstores are willing to pay. So it the superstores are buying it cheaper and cheaper and the overheads on the stores are tightly controlled yet the food prices creep ever higher, where is all the money going?
Next time I will continue this rant and look at the reasons that the Government is concerned about those nice eople in the superstores.
If you want to read more try these links to the BBC
Farmers concerns : http://news.bbc.co.uk/1/hi/business/3594908.stm
Growth of the Supermarkets :http://news.bbc.co.uk/1/hi/business/1356628.stm
